Bill 1523

                    Current Status

Bill Number:               1523
Ratification Number:       602
Act Number                 505
Introducing Body:          Senate
Subject:                   Relating to the Palmetto Seed Capital
                           Fund Limited Partnership

(A505, R602, S1523)

AN ACT TO AMEND SECTION 41-44-10, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE PALMETTO SEED CAPITAL FUND LIMITED PARTNERSHIP, SO AS TO PROVIDE THAT THE CORPORATION TO BE FORMED TO BE THE GENERAL PARTNER OF THE LIMITED PARTNERSHIP IS NOT REQUIRED TO BE NAMED THE PALMETTO SEED CAPITAL CORPORATION, AND TO PROVIDE THAT THE CREDITS ALLOWED FOR INVESTMENTS IN THE LIMITED PARTNERSHIP ALSO APPLY TO A TAXPAYER'S INSURANCE PREMIUM TAX LIABILITY; TO AMEND SECTION 41-44-60, AS AMENDED, RELATING TO THIS LIMITED PARTNERSHIP, SO AS TO MAKE THESE ABOVE-REFERENCED NAME AND TAX CREDIT CHANGES AND ALSO TO FURTHER PROVIDE FOR THE USE AND INVESTING OF THE INVESTMENT MONIES ACQUIRED BY THE FUND; TO AMEND ACT 643 OF 1988, RELATING TO THIS LIMITED PARTNERSHIP, SO AS TO CONFORM CERTAIN OF ITS PROVISIONS TO THE ABOVE-REFERENCED NAME CHANGE PROVISION; AND TO AMEND SECTIONS 41-44-90 AND 41-44-100, RELATING TO THIS LIMITED PARTNERSHIP, SO AS TO CONFORM THEM TO THE ABOVE-REFERENCED INSURANCE PREMIUM TAX CREDIT PROVISIONS.

Be it enacted by the General Assembly of the State of South Carolina:

Purpose revised

SECTION 1. Section 1 of Act 643 of 1988 is amended to read:

"Section 1. The purpose of this act is to establish the Palmetto Seed Capital Fund Limited Partnership whose purposes will include but are not limited to increasing the rate of capital formation, stimulating new growth-oriented business formations, creating new jobs for South Carolina; developing new technology, enhancing tax revenue for the State, and supplementing conventional business financing."

Definitions revised

SECTION 2. (1) Section 41-44-10(B) of the 1976 Code is amended to read:

"(B) The corporation means the corporate general partner of the fund."

(2) Section 41-44-10(F) of the 1976 Code is amended to read:

"(F) State tax liability means a taxpayer s total income tax liability that is incurred under Title 12 or insurance premium tax liability incurred pursuant to Chapter 7 of Title 38, or both, as computed after the application of credits, except the credits provided by this chapter."

Corporate general partner; investment monies

SECTION 3. (1) Section 41-44-60(A) of the 1976 Code is amended to read:

"(A) A corporation must be formed in the manner provided in this chapter and by law to be the general partner of the Palmetto Seed Capital Fund Limited Partnership, and operated pursuant to the laws of this State. The articles of incorporation, bylaws, and any other agreement relating to the organization or operation of the corporation must comply with the provisions set forth in this section."

(2) Section 41-44-60(B) of the 1976 Code, as amended by Act 3 of 1989, is further amended to read:

"(B) The Governor shall cause the corporation to be formed, and he shall designate the incorporators. The initial board of directors must consist of three members, one of whom must be appointed by the Governor and two of whom must be appointed by the State Development Board. Members of the initial board of directors shall serve three-year terms. The initial board of directors must be representative of the State as a whole. The registered agent must be designated by the Governor. The corporation s existence begins upon filing of the articles of incorporation. The corporation s existence is perpetual, unless dissolved as provided herein. The corporation is authorized to issue shares of a number, class, and par or no-par value, as provided in its articles of incorporation. The general nature of the business of the corporation is to serve as general partner of the Palmetto Seed Capital Fund Limited Partnership, to provide financing to high growth oriented businesses, to provide seed capital to South Carolina businesses, and to undertake any acts appropriate or necessary to carry out the foregoing. The bylaws, the organizational minutes, the election of officers, the issuance of any stock of the corporation, and any other actions appropriate or necessary for the organization and operation of the corporation must be of that form and content as determined by the board of directors. Nothing contained in the chapter may prohibit the shareholders or board of directors of the corporation from altering, amending, or otherwise modifying the articles of incorporation, bylaws, or any other agreement governing the corporation as otherwise permitted pursuant to the laws of this State, except that the general nature of the business of the corporation may not be amended, altered, or otherwise modified or restricted, and except that the corporation may be dissolved, merged, or otherwise cease to exist pursuant to the appropriate vote of the board of directors and shareholders. The Governor may expend those discretionary funds as he has available and considers appropriate for the purpose of organizing the corporation and promoting the sale of the qualified investments."

(3) Section 41-44-60(E) of the 1976 Code, as amended by Act 3 of 1989, is further amended to read:

"(E) The fund shall raise funds to provide financing to high growth oriented businesses. A high growth oriented business for purposes of this chapter means a corporation, general partnership, limited partnership, joint venture, trust, proprietorship, or other similar entity or organization which is expected to experience significant sales growth over the subsequent five-year period. All investments made from investment monies raised by the fund, for which the tax credit provided by this chapter is allowed and for which the tax credit is made available by the fund in the prospectus or offering, must be made to provide seed capital to South Carolina businesses, this seed capital to be used primarily for the purpose of enhancing the production capacity of these businesses or their ability to do business in South Carolina. However, to the extent that the fund directly induces seed capital monies from outside the State to be invested in South Carolina businesses in which it is also investing, the fund may substitute up to two-thirds of these outside monies for its own capital in fulfillment of the requirements of this section. Seventy percent of these investment monies induced into the State or acquired by the fund for which the tax credit is allowed and available must be invested to provide seed capital financing of either start-up businesses or pre-start-up businesses. The remaining thirty percent may be invested as the general partner of the fund determines to provide capital to South Carolina businesses."

Tax credits for insurance premium taxes

SECTION 4. Section 41-44-90 of the 1976 Code is amended to read:

"Section 41-44-90. To receive the credit provided by this chapter, a taxpayer shall:

(1) claim the credit on the taxpayer s annual state income or premium tax return in the manner prescribed by the appropriate commission; and

(2) file with the appropriate commission and with the taxpayer's annual state income or premium tax return a copy of the form issued by the corporation as to the qualified investment by the taxpayer, which includes an undertaking by the taxpayer to report to the appropriate commission any redemption of the qualified investment within the meaning of Section 41-44-80."

Commission reference changed

SECTION 5. Section 41-44-100 of the 1976 Code is amended to read:

"Section 41-44-100. The corporation shall complete forms prescribed by the appropriate commission which must show as to each qualified investment in the fund:

(1) the name, address, and identification number of the taxpayer who purchased a qualified investment; and

(2) the nature of the qualified investment purchased by the taxpayer and the amount paid for it.

These forms must be filed with the appropriate commission on or before the fifteenth day of the third month following the month in which the qualified investment is purchased. Copies of the forms to be provided to the appropriate commission must be mailed to the taxpayer on or before the fifteenth day of the second month following the month in which the qualified investment is purchased."

Heading changed

SECTION 6. The heading to Chapter 44, Title 41 of the 1976 Code is amended to read:

Applicability

SECTION 7. The provisions of Section 41-44-10(F), Section 41-44-90, and Section 41-44-100 of the 1976 Code, as amended by this act, which make the tax credit provisions of Chapter 44 of Title 41 applicable to insurance premium taxes apply to insurance premium taxes which accrue on and after January 1, 1990.

Time effective

SECTION 8. This act takes effect upon approval by the Governor.

Approved the 29th day of May, 1990.